New York-based AI startup Hugging Face has raised $235 million in a Series D funding round, valuing the company at $4.5 billion.
The latest funding round comes just 9 months after the company raised $100 million at a $2 billion valuation in May 2022.
The new round saw participation from major tech giants, including Google, Amazon, Nvidia, Intel, Salesforce and Qualcomm. It reflects the enormous interest in AI from big tech companies looking to invest in the space.
The Rise of Open-Source AI Trends
The prominent list of backers indicates that collaborative, open-source approaches to AI development are gaining significant traction.
This contrasts with other highly-valued AI firms like OpenAI and Anthropic, which develop proprietary models and charge for access.
Hugging Face hosts an open platform where users can freely share AI models, code, datasets and tools. The company likens this to GitHub, which hosts open-source code projects.
According to Clement Delangue, CEO of Hugging Face, this approach will enable AI development, saying “Hugging Face intends to be the open platform that enables this paradigm shift.”
Tools and Services for Enterprise AI Builders
In addition to the free public platform, Hugging Face generates revenue through advanced features, support and services for enterprise users.
Offerings include AutoTrain, which automates model training; a tool for implementing AI models without needing to manage infrastructure; and Infinity, designed to increase model speed.
The company claims 10,000 paying customers, including many employees of its big tech investors who use Hugging Face’s tools daily. The machine learning operations market in which Hugging Face operates is forecast to reach $16 billion by 2030.
Partnerships with cloud providers like Microsoft Azure and Nvidia also expand Hugging Face’s enterprise reach. The timely Series D round will likely accelerate this further.
Also read:
Plan to Double Down on Supportive Efforts
With the new capital injection, Delangue states Hugging Face will “double down” on supportive efforts in research, enterprise and startups. Growing the team is a key priority, with the headcount currently at 170.
The competitive AI talent market poses a challenge. Still, Delangue believes the funding will let Hugging Face “keep growing” and hire the best scientists and engineers.
Other plans include continuing development of open-source models like the recent StarCoder with ServiceNow. The startup will also invest heavily in its core platform, which hosts over 500,000 models and 250,000 datasets.
Valuation Indicates Strong Interest in AI
The impressive $4.5 billion valuation signals strong interest in AI startups from investors. It is over 100 times Hugging Face’s yearly earnings rate, despite the company not expecting profitability soon.
Other top-valued AI firms include OpenAI ($11.3 billion), Anthropic ($1.6 billion), Inflection AI ($1.5 billion) and Cohere ($435 million).
Hugging Face seems poised to keep climbing, with ambitious plans and backing from the most prominent tech giants. But, it faces challenges in hiring talent and growing revenue to match the steep valuation.
The open collaborative approach looks promising, but execution will be essential as AI development accelerates. Hugging Face has placed a big bet – its future now depends on paying off.
